THE WORLD OVER NING SCIENTIFIC GAMES CORPORATION SCIENTIFIC GAMES CORPORATION WIN 2007 ANNUAL REPORT 2007 ANNUAL Delivering Serious Fun! Scientific Games Corporation 750 Lexington Avenue New York, NY 10022 www.scientificgames.com SCIENTIFIC GAMES CORPORATION > 2007 ANNUAL REPORT CORPORATE INFORMATION 2007 REVENUE: $1,047 MM MANAGEMENT A. LORNE WEIL* STEPHEN L. GIBBS* Chairman of the Board and Chief Executive Officer Vice President and Chief Accounting Officer MICHAEL R. CHAMBRELLO* ROBERT C. BECKER* Diversified President and Chief Operating Officer Vice President and Treasurer Gaming DEWAYNE E. LAIRD* JAMES METCALFE 23% Vice President and Chief Financial Officer Vice President of Tax Lottery IRA H. RAPHAELSON* STEVE W. BEASON Systems Vice President, General Counsel and Secretary Vice President, Chief Technology Officer Printed and President of Lottery Systems Group Products SALLY CONKRIGHT* 25% Vice President of Administration DAVID R. PYE 52% and Chief Human Resource Officer Vice President of Corporate Development LARRY A. POTTS* BROOKS PIERCE Vice President, Chief Compliance Officer Vice President and President of Racing and Sports and Director of Security WILLIAM J. HUNTLEY STEVEN M. SAFERIN* Vice President Vice President and President of Properties 2007 NEW CONTRACTS * EXECUTIVE OFFICERS BOARD OF DIRECTORS PRINTED PRODUCTS 2007DIVERSIFIED NEW CONTRACTS GAMING 4 1,5 Argentina – Subito (Instant) Admiral Taverns – UK (Integrated Digital Solution) A. LORNE WEIL MICHAEL J. REGAN PRINTED PRODUCTS DIVERSIFIED GAMING California Horse Racing Industry (Racing Systems/Terminals) Chairman of the Board and Chief Executive Officer Former Vice Chairman and Chief Administrative Camelot Group plc (Instant) Admiral Taverns – UK (Integrated Digital Solution) of Scientific Games Corporation Officer of KPMG LLP Argentina – Subito (Instant) Camarero Group – Puerto Rico (Racing Systems) United Kingdom National Lottery 2,4 CorporacionCalifornia Horse Interamericana Racing Industry de Entretenimiento (Racing Systems/Terminals) (CIE) PETER A. COHEN 1,2,3 Camelot Group plc (Instant) BARRY F. SCHWARTZ (Multi-GameCamarero Group Server-Based – Puerto Terminals) Rico (Racing Systems) Vice Chairman of the Board of Scientific Games Corporation. Executive Vice Chairman and Chief Administrative Officer ConnecticutUnited Kingdom (Instant) National Lottery Principal of Ramius Capital Group, LLC and former Corporacion Interamericana de Entretenimiento (CIE) of MacAndrews & Forbes Holdings Inc. Cycle Racing Association – South Korea (Terminals) Chairman of the Board and Chief Executive Officer ElConnecticut Salvador (Instant) (Instant) (Multi-Game Server-Based Terminals) Direktorium fur Vollblutzucht und Rennen of Shearson Lehman Brothers ERIC M. TURNER1,3 WirtschaftsdiensteCycle Racing Association und Beteiligungs-GmbH – South Korea (Terminals) (Venue Mgmt.) IdahoEl Salvador (Instant) (Instant) GERALD J. FORD3,5 Former Senior Vice President, State Street Corporation and former Enterprise Direktorium Inns fur – Vollblutzucht UK (Integrated und Digital Rennen Solution) Chairman of First Acceptance Corporation. Executive Director of the Massachusetts State Lottery Commission IowaIdaho (Instant) (Instant) GreatWirtschaftsdienste Canadian Gaming und Beteiligungs-Gmbh Corporation (Racing (Venue Systems/Terminals) Mgmt.) Former Chairman and CEO of Golden State Bancorp Inc. JOSEPH R. WRIGHT, JR. Iowa (Instant) MSL – Ukraine (Cooperative Services) GreeneEnterprise King Inns – UK – UK (Integrated (Integrated Digital Digital Solution) Solution) J. ROBERT KERREY2,5 Vice Chairman of the Board of Directors of Scientific Games MSL – Ukraine (Cooperative Services) IndianaGreat Canadian Downs (Racing Gaming Systems) Corporation (Racing Systems/Terminals) President of The New School, New York City. Corporation (effective May 1, 2008). Chairman of Intelsat, Ltd. Ohio (Instant) (until May 1, 2008) and former Chief Executive Officer of JacksonGreene KingHarness – UK (Racing (Integrated Systems) Digital Solution) Former U.S. Senator and former Governor of Nebraska Ohio (Instant) PanAmSat Corporation. Marston’s Inns and Taverns – UK (Integrated Digital Solution) 4 Rheinland-Pfalz – Germany Indiana Downs (Racing Systems) RONALD O. PERELMAN (Cooperative Rheinland-Pfalz Services) – Germany New Jersey Account Wagering 1 4 Jackson Harness (Racing Systems) Chairman and Chief Executive Officer COMMITTEES Audit Executive & Finance (Cooperative Services) (Internet and Interactive Voice Response System) of MacAndrews & Forbes Holdings Inc. 2 Compensation 5 Nomination & Rhode Island (Instant) Oneida Tribe of Indians of Wisconsin (Race book Venue Mgmt.) 3 Compliance Corporate Governance Oneida Tribe of Indians of Wisconsin (Race Book Venue Mgmt.) Rhode Island (Instant) Orchid Group – UK (Integrated Digital Solution) Orchid Group – UK (Integrated Digital Solution) Prairie Meadows Racetrack (Racing Systems) Prairie Meadows Racetrack (Racing Systems) AUDITORS CONTACT INFORMATION LOTTERY SYSTEMS Presque Isle Downs (Racing Systems) LOTTERY SYSTEMS Presque Isle Downs (Racing Systems) Deloitte & Touche, LLP Investor Relations Scioto Downs (Venue Mgmt.) Atlanta, Georgia Scientific Games Corporation Connecticut (Lottery System/Terminals) Scioto Downs (Venue Mgmt.) Connecticut (Lottery System/Terminals) Sportech/Littlewoods Football Pools – UK (Venue Mgmt.) 750 Lexington Avenue Sportech/Littlewoods Football Pools – UK (Venue Mgmt.) TRANSFER AGENT Golden Casket – Australia American Stock Transfer & Trust Company New York, NY 10022 Golden Casket – Australia TheThe SpiritSpirit GroupGroup –– UKUK (Integrated(Integrated DigitalDigital Solution)Solution) (Lottery System/Terminals) 59 Maiden Lane Tel: 212-754-2233 (Lottery System/Terminals) Traberliga – Germany (Venue Mgmt.) Traberliga – Germany (Venue Mgmt.) New York, NY 10038 Fax: 212-754-2372 WilliamWilliam HillHill –– UKUK (Multi-Game(Multi-Game Server-BasedServer-Based Terminals)Terminals) Tel: 800-937-5449 NorwayNorway (Software)(Software) Website: www.scientificgames.com Win-RaceWin-Race –– GermanyGermany (Venue(Venue Mgmt.)Mgmt.) Website: www.amstock.com E-mail: [email protected] STOCK SYMBOL NASDAQ: SGMS TO OUR SHAREHOLDERS 2007 truly was a year of “Winning the World Over” for Canada and Sydney, Australia, Scientific Games and it is just the beginning. In 2007 nearly but broadened our presence half of our revenue was generated from customers outside with OGT’s client list in of the United States and that percentage is accelerating. 50 countries. Whether through new acquisitions, joint ventures, or In addition to buttressing contract wins, we have made tremendous strides to expand acquisitions, we continue to our footprint in Asia, Europe, and Latin America this year, make constant investment in our which positions us for growth well into the future. infrastructure. A great example The People’s Republic of China (PRC) has clearly been the most of this is our new high-speed heralded market of economic growth for the past couple of years. press, (P-6), in Alpharetta, Georgia. P-6 was designed This year, we had several announcements which signal that we are and custom-built to our company’s specifications, brought positioned to be the instant ticket leader in the PRC, the world’s our total capacity to 31 billion instant tickets per year and fastest growing lottery market. In May of 2007, we announced our is believed to be the highest capacity lottery press in joint venture with Inspur to launch cooperative services on behalf the world. of the China Sports Lottery in the Shandong province, with a These infrastructure enhancements helped us to win many instant population of 92 million. Soon thereafter, in July, we acquired a ticket contracts both domestically and internationally in 2007. 50 percent interest in Guard Libang, a leading provider of instant In the U.S. we were awarded the instant ticket contracts for Rhode ticket cooperative services in China with contracts in 17 China Island, Connecticut, Idaho, Ohio and Iowa. Internationally we Welfare Lottery provinces, giving us access to 30 of the country’s were selected as the instant ticket provider for Camelot in the UK, wealthiest cities and 792 million people. In February of 2008, Rheinland-Pfalz in Germany, MSL in Ukraine, and as the primary we announced a printing contract for the China Sports Lottery as provider for Francaise des Jeux in France. In addition, our Italian well as a validation system for all 31 provinces servicing 1.3 billion joint venture reported another record year of instant ticket sales, people. Already in 2008 we are seeing extremely promising results, generating nearly 8 billion Euros in 2007. having shipped almost a billion instant tickets to China. Also fueling growth is the continued success of our licensed The Global Draw acquisition from 2006 proved extremely timely products division, which continues to be the best in the when the British gaming laws changed to allow extended hours business. In September 2007, we launched the first multi-state of operation and enhanced capabilities through the introduction linked instant game, Deal or No Deal,™ which was sold by of combined B2/B3 machines in betting shops. Global Draw was 22 U.S. lotteries and considered a major success, with more the only vendor able to upgrade its entire installed base (9,500 of its kind to come in 2008. terminals) in time for the September 2007 gaming law change. Since the switch, the new dual-screen Nevada™ terminals have Another achievement in 2007 was the introduction of